TOP 20 PERSONAL BANKRUPTCY FAQS

1 - How do I know if I am in financial trouble?

If you are having trouble meeting your financial obligations
or have stopped meeting your financial obligations, you are in financial
trouble. Contact a professional, federally licensed trustee as soon as possible
to discuss your options.

2 - Is bankruptcy my only option to get out of debt?

3 - I have seen ads from Debt Settlement companies saying
they can wipe out my debt without using a trustee in bankruptcy. How does that
work?

In order to file for bankruptcy you must engage a trustee
in bankruptcy, an individual licensed by Industry Canada to administer the
bankruptcy process. There is also no such thing as "wiping out your debt".
Bankruptcy only wipes out unsecured debts which include credit card debt,
personal loans and overdrafts. It does not cover things like mortgages, car
loans, alimony or child support. Debt Settlement companies offer to negotiate
with your lenders to either reduce the amount owing and arrange a repayment
schedule or arrange a longer period of time for you to pay off the entire debt;
not "wipe out your debt". Be aware that these companies are not licensed
trustees and therefore are not subject to the oversight of the regulator,
through the Superintendent of Bankruptcy (OSB). Always deal with a
professional, federally licensed trustee with respect to any issues related to
debt.

4 - Do I qualify for bankruptcy?

Anyone who is insolvent and owes more than $1,000 is
eligible for personal bankruptcy in Canada.

5 - Should I declare bankruptcy?

Without knowing the details of your particular situation
that determination can't be made. Contact Ira
Smith Trustee & Receiver Inc. for a free no obligation consultation so
you may begin Starting Over, Starting Now.

6 - If I go bankrupt, will I lose everything?

No, you will not lose everything. There is a list of items
that are exempt from seizure. ContactIra
Smith Trustee & Receiver Inc. for more information.

7 - Once I declare bankruptcy, what happens to the money I
owe?

Once you declare bankruptcy you will be required to
surrender certain assets to the trustee. These assets will then be sold and the
money earned from the sale of the assets will be distributed amongst your
creditors.

8 - Even though I haven't found work in my field of study, I
still owe money on my student loans. Will my bankruptcy eliminate that
debt?

If your date of bankruptcy is within seven (7) years of when
you ceased to be a full or part-time student, your student loan debt will not
be discharged by your bankruptcy. However, in certain specific cases, you may
be able to make an application to the court for a discharge of your student
loan debts under the "hardship provision."

9 - What happens to my wages during a bankruptcy?

Wages are not affected by bankruptcy but you will have to
fill out an Income and Expense Form listing your family income and expenses;
this is part of your budgeting process. If your income exceeds certain
standards established by the Office of the Superintendent of Bankruptcy (OSB),
you will be expected to pay a portion of the surplus into the bankruptcy estate
through the trustee.

10 - Canada Revenue Agency has frozen my bank account and has
lodged a garnishee with my employer on my wages. How can I stop that?

If you have declared personal bankruptcy, personal income
tax debt is an unsecured debt. Once you've filed for bankruptcy or submitted a
consumer proposal, Canada Revenue Agency (CRA) can't take any further action
against you, including wage garnishment or freezing your assets. Your trustee
will notify CRA once you file and instruct it to stop any further action
against you to collect that debt.

11 - Will I still owe money after I declare bankruptcy?

Perhaps, because bankruptcy does not cover secured creditors
- mortgages, car loans, student loans (if it is less than seven years since you
ceased to be a full or part time student), fines or penalties imposed by the
court, alimony and support payments you must make in your divorce proceedings
and debts arising from fraud.

12 - How long will I be bankrupt?

The length of time you will be bankrupt will depend upon
whether this is a first or second bankruptcy and your final calculated surplus
income. ContactIra Smith Trustee &
Receiver Inc. for more information.

13 - Who will find out that I have declared bankruptcy?

Once you declare bankruptcy your Trustee will notify your
creditors, the Canada Revenue Agency (CRA), credit reporting agencies and the
Superintendent of Bankruptcy. Bankruptcy is a matter of public record and it
will appear in your credit report. In addition certain bankruptcies require an
advertisement in the "legal" section of a local newspaper.

14 - How will bankruptcy affect my credit rating?

A person who declares bankruptcy is assigned the lowest
possible credit rating score. Information that affects your credit score is
ultimately removed many years after your discharge from bankruptcy.

15 - What does a Trustee in Bankruptcy do?

A trustee in bankruptcy is a person licensed by the Office
of the Superintendent of Bankruptcy (OSB) to administer bankruptcy and proposal
estates. An officer of the Court, the trustee has an obligation to look after
the rights of the creditors and to investigate the affairs of the debtor, as
required. The trustee also ensures that the rights of the debtor are not
abused. According to the OSB the trustee:

Reviews and counsels debtors on available
alternatives

Prepares official documentation that is both filed with
the OSB and used to notify creditors

Ensures the validity of creditors' claims

Ensures that debtors are provided with mandatory
counselling and access to mediation services if there is a dispute regarding
any income they are required to contribute

Sells the debtor's assets, except those exempt from
seizure by provincial and federal laws, and hold the proceeds in trust for
distribution to creditors

Administers the bankrupt estate from beginning to
end

Assesses the debtor's conduct both before and during a
bankruptcy, as well as the cause(s) of the bankruptcy; and

Arranges for (and if necessary reports all of the above
to the Court) for the bankrupt's application for a discharge (in the case of
individual debtors)

16 - How do I choose the right trustee?

Arrange for a free no obligation consultation with a
federally licensed trustee. Ask any questions that you may have about
bankruptcy alternatives, bankruptcy and/or the bankruptcy process. If you are
comfortable with the trustee and satisfied with the answers that you have been
given, then by all means proceed with this trustee. If not, make an appointment
with another trustee and repeat the process until you find a trustee that you
feel comfortable working with.

17 - Is my spouse affected by my bankruptcy?

Your spouse will not be affected by your bankruptcy unless
your spouse co-signed a debt or owns assets with you jointly. A creditor can go
after your spouse for repayment and he/she will be responsible to continuing to
make the payments.

18 - How will my bankruptcy affect my current divorce
proceeding?

In Canada, bankruptcy proceedings do not interfere with most
of the divorce proceedings. However, the trustee will now stand in the shoes of
the bankrupt spouse and replace the bankrupt spouse when it comes to the rights
to either the equalization payment or the division of property.

19 - What is Chapter 7?

Chapter 7 is not applicable in Canada. It is the liquidation
section of the U.S. Bankruptcy Code, the federal law governing bankruptcy in
America. Under Chapter 7 the company stops all operations and goes completely
out of business. A trustee is appointed to sell the company's, or subject to
certain exemptions, the individual's assets and the money is used to pay off
debt. The investors, or creditors, who take the least risk are paid
first.

20 - What is Chapter 11?

Chapter 11 is not applicable in Canada. It is a section of
the U.S. Bankruptcy Code, the federal law governing bankruptcy protection in
America. Chapter 11 involves the reorganization of the debtor's business
affairs and assets. The company undergoing Chapter 11 expects to return to
normal business operations and sound financial health in the future. It's
generally filed by corporations that need time to restructure debt that has
become unmanageable.

For more information on any matters related to personal
bankruptcy ContactIra Smith Trustee &
Receiver Inc. so we can help you with Starting Over, Starting
now